Attempting financial independence in Ireland

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So I’ve probably revealed too much about my finances on this blog, kind of knew it as I did it but I’m going to remove the parts which show my income and the detailed spending analysis and leave high level data instead. The personal stuff is staying though.

I’m just going to show spending by category for the full years completed so far, 2014 and 2015. As here:

2014

2015

Savings

31.5%

34.5%

Entertainment

12.4%

14.1%

Other

9.1%

8.8%

Bills

12.1%

8.5%

Upkeep

4.4%

7.8%

Travel

8.5%

7.5%

Mortgage

9.4%

7.4%

Groceries

6.6%

7.1%

Health

6.0%

4.3%

There is increased spend on upkeep but lower on health as I cut insurances and got better priced medication. The savings rate and mortgage interest percent have gone down, suggesting my income (pure take home pay, pension contributions not included but also rent and anything else receivable) increased as it did. Bills went down as property tax, home insurance and waste collection were all paid for 2015 in 2014. Entertainment went up due to my lovely girlfriend :-).

Unfortunately though the percentages aren’t enough to retire as early as I’d like and are only set to get worse in 2016 :-(.

Savings includes the capital element of my mortgage repayments, it would be 20.9% in 2014 and 25.2% in 2015 otherwise.

Other is charities, cleaner, clothing, gifts, memberships and miscellaneous. Upkeep is repairs, maintenance, DIY, tradesmen expenses and new appliances. Bills is taxes, technologies, insurances and utilities. I intend to count wedding gifts in travel so this will see an increase in 2016 as will upkeep.

So I originally planned to retire from office work at 40, with a view to entering Green politics. Based on my seemingly out of control and ever increasing (despite being meticulously tracked) spending so far, this is looking less and less likely. After less than 2 years of saving, the goal has been pushed out 3 to age 43 and even that requires some ambitious spending reduction assumptions. There are reasons why the spending has increased, but there will be reasons why it will increase in the future.

So far, so what – so I will only be able to retire at 43 or maybe 45 or even 50 – still far earlier than most and making me sound like a spoiled rich kid complaining about it. Well at this point I have to link it to the environment – we need to get off our unsustainable path fast if there is any hope to avoid a temperature rise of 2 degrees or, more likely, much more than that. But what people don’t grasp is that even if there was no global warming, we would still need to abandon the nonsensical dogma of exponential economic growth as the earth is finite, exponential growth is unsustainable on a finite planet – fact. You either agree or you simply don’t understand. Sadly, most people even Green party members fall into the latter camp as I have seen from attempting to sway online debates. Basically I’d like to devote my life to crusading against the current economic paradigm. No doubt this would make Don Quixote look effective, I can’t think of a single instance in my life where I managed to convince anyone of anything (people don’t like facts is my sad take on life, an argument over chopsticks confirmed this to me). But damn it when the global resource shortage becomes undeniable which I would expect to happen in my lifetime, I can’t say I did nothing. And if it doesn’t, see the attached image

So what am I gonna do about it then?

Well my current strategy is to save enough money until I’ll never have to do paid work again and therefore can focus on whatever I can do to try to help persuade people to get mankind to a sustainable society. However as per the above this is likely to take at least 10 years, barring some unexpected windfall. Perhaps I should have the guts to retire now and see how I get on, after all I have at least 1 year of spending’s worth of savings built up. I’ve actually told my colleagues in work I plan to retire early (surely a career-limiting move) but it doesn’t seem to bother anyone bar some teasing.

Of course I thought like this before, when I was aged 19 and 20 and required psychiatric help. It’s not up to me to save mankind from the path we’re on. But like I said before, I want to be able to say I tried. I also had an evening in my mid twenties when I decided I would quit work to do this, talked to my housemates about it (they weren’t on board) and thought my parents would support me. I said nothing the next day in work and surprise surprise my parents were not happy either. So I decided I needed to get my own house before I quit my job! That bit is accomplished but I need to think carefully about whether I quit my work. The hours aren’t bad, but I’m not someone with enormous reserves of energy, as can be seen from the rare posts on this blog – so if I could figure out a way that I don’t devote the best years of my life to a job I don’t really care about but still have enough money to get by I’d do it in a heartbeat.

Time for an update. For one thing I’m going with Triple R instead of IrishSaver.

2016 so far has seen exorbitant levels of spending – I’ve attended 6 weddings so far with 2 to come and have re-decorated the house (inspired by my lovely girlfriend). The final spending number for this year will greatly exceed last year, but I have had increased income due to switching my mortgage, selling my car and I expect to receive a small inheritance later in the year. So be warned, the 2016 spending will be ugly. The goal of retiring by the end of the calendar year in which I am 40 looks to be slipping, if it ends up being past 45 I’ll consider I’ve failed – though I am putting the max into my pension so I’d retire at 50 at the absolute latest in any case.

The point of this article is what would I do to make the human population on the Earth sustainable. I have a game called ‘Fate of the World’ where you are the fictional CEO of a Global Environmental Organisation (GEO) with considerable powers. The goal is to keep global warming below 2.0 degrees Celsius and keep the Human Development Index of the world above 0.7 by 2100. I doubt very much the nations of the world will come together to do this, but if they did – here is the policies I would advocate if for some bizarre reason I was given the job (in no particular order).

Invest in 3rd World – Use Tobin Tax (and some other) proceeds to invest in poorer countries, particularly in Education.

Promote Vegetarian Food – I am not vegetarian myself, nor do I possess the willpower to become one but I do try to reduce my meat and fish consumption and the more people can reduce it the better for the environment – sometimes there aren’t any good vegetarian options available (or what is available doesn’t have much protein) and the easy option is meat.

Carbon Tax – Significantly increase Carbon Tax and use the proceeds to subsidise renewable energy and associated technologies – we know we have to get off fossil fuels so we might as well put them to good use while we’re still using them.

Land Value Tax – This would replace a significant amount of income taxes and reduce speculation in housing – promoting more efficient development.

Basic Income – This can be funded from other taxes and Sovereign Money Creation – more of a social than environmental issue but would reduce inequality and poverty.

So if I’m to follow in the footsteps of my heroes Mr Money Mustache and The Escape Artist I’ll need to come up with a catchy name for myself. Having called the site Rat Race Rejection, I don’t think Rat Race Rejector is going to cut it. So I’ll go with Irish Saver, which will have to do.

MMM and TEA talk about the path towards Financial Independence and how you need to lead a simple life and focus on self improvement to achieve this. I can freely acknowledge that I suck as MMM says, but I’ll outline here a flavour of the steps I’ve taken of self improvement and towards FI.

The low point in my life was the 2 periods I was in psychiatric hospitals with schizoprenia in Feb 2003 and Dec 2003-Jan 2004. I was still in 3rd year of college at that point and starting on work experience in a place that I hated. got through it though and finished college with a 1st class honours degree after arguing the psychiatrists down to a low enough dose of medication that I could function almost normally. It took me 12 interviews to get a job at the height of Celtic Tiger Ireland as my confidence was shattered.

However I did get a job and kept at it, and moved out from home at age 23 in 2007. At this point in my life I was convinced that what I should do was to try effectively save the world in an environmental sense (this had contributed to my illness), and I focused a lot of my mental energy on this. My thinking was I don’t care what happens in my own life, I want to make a difference to the world. This of course was obviously backwards and had the predictable result that I achieved nothing towards either goal and slowly gained weight (my vanity prevented me from going beyond a stone and a half overweight). I’d have loved nothing more than to have a relationship but was convinced no girl would touch me with a barge pole given my condition, which was sort of self-fulfilling. I had not heard of financial independence, but the one thing I was doing was focusing on saving for a house and in 2011 together with some money from my parents and fortunate timing I bought a house.

Owning a house seemed to give me the confidence boost I needed to start having some relationships, all through dating sites of some description – currently in one now which makes me happy. Most people probably wouldn’t need this kick but I guess the point is that I kept trying to improve my situation and eventually got some success. Now, onto the next step – FI!

I’d always wondered to myself, what will I do in work all the way to 65, I don’t particularly ever want to be a manager. So for about 3 years I sort of drifted – I was spending most of my money. A decent salary plus I have 2 tenants practically covering the mortgage. Then a friend introduced me to MMM. I was immediately hooked (August 2014) and it has become one of my 2 life goals (you can probably guess the other one from the above paragraphs). I was already tracking my spending, but I really focused on where I could save. So far I’ve cut out unneccessary insurances for starters. However, I’ve a long way to go, spending is still well above what I’d like for various reasons, some of which are tenant related. There are lots of people I’m sure who are much better than me at it. However I intend to improve little by little towards my goal of FI by year end 2023. I’ll upload my spending for 2014 soon so you can see how badly I was doing at the start.

The site doesn’t have much yet, does it? I’ll promote it once there is more to show. For now I’ll add a little colour (not literally yet) by introducing the second main motivation for this site – protecting the environment.

To be clear, I believe in maximising human happiness. To do this I want the maximum sustainable population on Earth for the maximum length of time, i.e. until the sun fries us all if we haven’t mastered interstellar travel. According to the book ‘The Spirit Level’ by Richard Wilkinson and Kate Pickett, inequality redues happiness. So for any given maximum sustainable population, the maximum happiness is associated with low (not necessarily non-existent) inequality.

According to many sources including Population Matters, the Earth is in overshoot, i.e. we are consuming more resources than can be sustainably produced. The reason this situation can continue at all is that we have stocks of resources such as fossil fuels, forests and groundwater. Clearly if we are reducing the stocks then the population is not sustainable. So the maximum population is that which uses on average all renewable resources but no resource stocks. In practice each renewable resource will be a limiting factor and the lowest one will determine the maximum sustainable human population.

I don’t think I need to prove that we are currently using stocks of resources (but I will later anyway!) so clearly we are using more of our environment than is compatible with the maximum happiness goal. Therefore I am attempting to help us to be more sustainable wherever possible.

The amount of resources used by humanity is PCT or Population x Consumption (often put as Affluence) x Technology, so the more efficient Technology is the better. However that is only 1 of 3 factors. I am optimistic that population will gradually sort itself out as birth rates have declined below replacement level in most of the developed world (we can worry about getting them back up later) and are declining in much but not all of the developing world. Most of the world needs to get richer to be consistent with my low inequality point so I think consumption per head can and should increase (on average) until it reaches the level at which people can be happy.

In the Western world however we are way beyond that point, and need to use our resources more efficiently to get consumption down without sacrificing happiness. Fortunately there is plenty of room to do this and as other Finance blogs such as Mr Money Mustache or The Escape Artist point out you don’t need lots of stuff to be happy.

So even if I don’t actively promote environmentalism (I intend to once I gain financial independence), merely reducing my own consumption and encouraging others to do the same is good for the environment!

This is a blog that will chronicle my attempt to be financially independent and stop working in a traditional 9 to 5 job by end of the calendar year in which I will be 40 (2023).
Most people are willing to accept the received wisdom that everyone should work from finishing education right up until they are 65 (or even 68 now in Ireland which is when the state pension will kick in for people my age). If someone spends most of their money then that is right, they will need to work for that long. It seems that no matter how much someone earns, their spending rises to match their earning. I think that beyond a certain point the spending is not necessary or making people any happier, all it is doing is ensuring you have to work for much longer.
I’m not suggesting it’s for everyone, some people I assume genuinely love their jobs. For me I’m not sure that 2023 will be soon enough, I’d retire right now if I could! I had dreamt often about being able to retire early, but it was only really when I was introduced to the Mr Money Mustache site that I found the moral back up I needed to do this.
Well I’ll post on specific aspects of my plan later, including the spreadsheet that plans it all.